The Legitimacy of Taxation

Mr. Yankuba Darboe, Commissioner General Gambia Revenue Authority (GRA) has emphasized that there is always an expectation from the citizen that the taxes they pay come back to them in the form of goods and services, adding that therefore, taxation can only be legitimate if the revenues derived therefrom are utilized for the public good.

He made the statement at the opening of the 9thWAUTI international tax conference, underway in Banjul on Wednesday.

“In giving his or her consent to be taxed, the main concern of the taxpayer is what they get directly in return from their tax payments, in the form of services.

“This fiscal contract is seen to be the foundation of the relationship between the state and its citizens. Every government therefore must provide for the funding of public goods and services in budgetary allocations.

“What percentage of tax revenues goes into a particular good or service or sector has always been the subject of debates since the establishment of modern states,” Commissioner General Darboe pointed out.

He added: “In The Gambia, for example, we have seen a significant increase in budgetary allocations to critical sectors of the economy such as agriculture, healthcare, education, and infrastructural development. A major infrastructure project that comes to mind is the Banjul Rehabilitation Project, which was fully funded with tax revenue.”

He noted that Governments across Africa are becoming more responsive to the needs of their citizens who are craving for economic prosperity.

CG Darboe stated that by 2050, the African youth population will constitute about 20% of the global youth population and today, more than 60% of Africa’s population is under the age of 25, with 70% of sub-Saharan Africa under the age of 30.

According to him, this could be a blessing or a curse and it could be a blessing if the African continent can stimulate the economy to give this youthful population the right economic environment to thrive and prosper, and like China, uplift a significant number of them out of poverty.

“On the other hand, it could also be a curse if African governments are not responsive to the yearnings for economic prosperity from its citizens across the continent. With more mouths to feed, more bodies to keep healthy, and millions of jobseekers waiting in line, the collective frustrations and hopelessness of an unemployed young population can result in severe consequences for the continent. This reality is better imagined than experienced,” CG Darboe pointed out.

He noted that it is also important to ensure that our tax system is simple, transparent, and easy to comply with.

“Complex tax codes can create barriers to economic participation and disproportionately impact small businesses and low-income earners,” he said.

He challenged participants to re-think taxation in a way that promotes human development and economic prosperity, adding that one approach is to adopt a progressive tax system, in which higher income earners are taxed at a higher rate.

He emphasized that this helps reduce income inequality and ensure that those who can pay more contribute a fair share towards the common good.

“This means considering not just the amount of revenue that is collected, but also how that revenue is used and the overall impact it has in enhancing the welfare of our citizens.

Another approach is to reduce the cost of compliance for taxpayers. Taxpayers already have the burden of paying out a significant portion of their income to the taxman in an effort to comply with their tax obligations,” he pointed out.

He urged tax administrations to reduce the cost of compliance for taxpayers to the bare minimum, especially for small and medium enterprises.

“To achieve this objective, the Gambia Revenue Authority launched its transformation agenda of automating the domestic revenue collection system, processes, and procedure by the end of 2024 to reduce the cost of compliance and bring the taxman to the fingertips of the taxpayer,” he said.

Original Source: Gambia.com